Whatever one thinks about open source software and software patents, the recent settlement of Microsoft’s patent infringement lawsuit against TomTom illustrates that both are here to stay and that conflicts between owners of intellectual property rights (IP) at the intersection of the two can be resolved in the usual way.

To be sure, five of the eight Microsoft patents at issue in the case had nothing to do with the open source Linux operating system used in TomTom’s car navigation devices. Microsoft stressed that its lawsuit was not the beginning of an assault on Linux(1), and Jim Zemlin, executive director of the Linux Foundation, characterized it as “a private dispute” and urged others not to jump to the conclusion that it was anything more(2). Nonetheless, the lawsuit – and its quick settlement – may tell us something about the ongoing evolution of the tech industry and how open source software (OSS) figures within it.

What does the Microsoft-TomTom settlement mean for tech companies and their customers? Here are four takeaways:

Takeaway 1: Open source software is not an IP-free zone.

There is a great deal of confusion among non-lawyers about the applicability of intellectual property (IP) rights to OSS. Perhaps contrary to popular opinion, the OSS model is based upon the existence of IP rights.

The most commonly used OSS license is Version 2 of the GNU General Public License, or GPLv2. As explained in the GPLv2 itself(3), it relies upon the existence of and ability to enforce copyrights, as does any software license. All licenses grant users a subset of the rights held by the software’s creator, so long as users comply with the obligations and restrictions found in the license. For example, like other “copyleft” OSS licenses, the GPLv2 requires users to make any improvements (and related source code) available to the world only under the GPLv2, just as the original creator of the software chose to do. OSS also can be protected by patents, and it can infringe patents that protect other software.

The Microsoft-TomTom settlement is further evidence that sophisticated developers and distributors of OSS understand that OSS is not an IP-free zone. A settlement is not an admission of liability, of course, but TomTom’s decision to settle quickly, on terms that require it to stop using some of Microsoft’s Linux-related patents and shield its customers from lawsuits for infringement of other Linux-related Microsoft patents, presumably is a tacit acknowledgment that Microsoft’s infringement claims need to be taken seriously.

3. Paragraph 5 of the Preamble to the GPLv2 says, “We protect your rights with two steps: (1) copyright the software, and (2) offer you this license which gives you legal permission to copy, distribute and/or modify the software.” See GNU General Public License, version 2 (last visited Apr. 8, 2009).

Takeaway 2: IP lawsuits, including suits involving OSS, are just business as usual.

Traditional software companies have brought IP infringement lawsuits against one another for eons. Now, we not only see traditional software companies occasionally suing distributors of OSS, we see distributors and proponents of OSS suing others, both offensively and defensively(4).

For example, in September 2007 the Software Freedom Law Center, an organization that provides legal services to protect and advance OSS, filed an enforcement action against Monsoon Multimedia on behalf of the creators of BusyBox software, which is distributed under the GPLv2(5). The suit alleged copyright infringement for distribution of modifications to the software without making source code for the modifications available as required by the GPLv2. In Europe, guardians of OSS also are aggressively pursuing license violations as copyright infringement. A group called the gpl-violations.org project claims to have successfully enforced the GPL in over 100 cases between 2004 and 2006(6).

Patent related OSS litigation is also becoming common(7). Microsoft is not the first traditional software company to sue an OSS vendor for patent infringement, and TomTom is not the first major OSS distributor to settle a suit. In June 2006, Firestar Software sued Red Hat, a leading commercial distributor of OSS, alleging that Red Hat’s open source Hibernate product infringed a patent covering Firestar’s ObjectSpark technology(8). The companies have since settled the dispute.

In another recent case, Trend Micro, a developer of software that protects computers against viruses and spam, sued Barracuda Networks, a company that sells hardware containing open source anti-virus and anti-spam software, for patent infringement(9). In response, Barracuda Networks sought support from the open source community. It ultimately initiated a separate lawsuit to try to have Trend Micro’s patents declared invalid(10) and another lawsuit alleging that Trend Micro was infringing three patents newly acquired by Barracuda Networks from IBM, which contributes to OSS projects and distributes OSS as part of its marketing strategy for its hardware and services offerings(11). TomTom used Barracuda Networks’ defense strategy – counter-suing with patents newly acquired from a third party – in a patent infringement suit brought against it by another competitor, Garmin(12). Before the recent settlement, TomTom also sued Microsoft for patent infringement in response to Microsoft’s lawsuit.

Patent infringement claims by OSS vendors aren’t always defensive. Indeed, TomTom sued its Japanese navigation product rival Aisin AW last year for allegedly violating four of its patents(13). Barracuda Networks, TomTom and other OSS vendors are sophisticated companies that understand the IP environment and deploy both IP rights and OSS to their commercial advantage(14).

All of the lawsuits mentioned above were settled. IP lawsuits, including those involving OSS, settle in one of the following ways, or some combination of them: the defendant stops using the plaintiff’s IP, the defendant pays the plaintiff for a license to use it, or the parties cross-license IP to one another.

In the Microsoft-TomTom settlement, TomTom agreed to take a paid license under Microsoft’s car navigation patents. While TomTom agreed to stop using the FAT LFN file system technology covered by two patents that Microsoft claims are infringed by the Linux operating system used in TomTom’s navigation devices(15), TomTom will continue to use technology covered by two other patents that Microsoft claims are infringed by Linux. Microsoft agreed not to sue TomTom’s customers based on their use of that technology(16).

Some people believe the GPLv2 prohibits all types of “discriminatory” settlements of patent suits, i.e., settlements that protect some licensees of GPLv2-covered software without providing the same protection to all other licensees. It does not. The GPLv2 prohibits agreements that cannot be honored while honoring the terms of the GPLv2(17), but it is possible to structure settlements and other agreements that do not induce anyone to violate the GPLv2. Microsoft has now reached several patent truces with companies that distribute software under the GPLv2, not least of which is its 2006 agreement with Novell. That agreement includes a covenant not to sue end users of products containing the infringing patents. Several leaders of the Free Software Foundation, including Richard Stallman, have publicly stated that the Novell deal is consistent with the GPLv2(18).

14. According to the online records of the United States Patent and Trademark Office, Dean Drako, the founder of Barracuda Networks, filed applications for two anti-spam related software patents long before Trend Micro sued Barracuda Networks: Patent Application No. 20060248575, titled “Divided encryption connections to provide network traffic security,” filed on November 2, 2006; and Patent Application No. 20060238991, titled “Low profile expansion card for a system,” filed on October 26, 2006. Both applications are still pending.

15. Some critics of Microsoft’s suit against TomTom, like Bruce Perens, creator of the Open Source Definition, claim Microsoft’s File Allocation Table Long File Name (FAT LFN) patents are not innovative, implying, it seems, that they could be invalidated if challenged. See Bruce Perens: Analyzing Microsoft’s TomTom Lawsuit (last visited Apr. 8, 2009). In fact, each patent has been affirmed twice by the U.S. Patent and Trademark Office, in the original examination and later during re-examination in 2006. U.S. Patent No. 5758352 was affirmed through reexamination on October 10, 2006, and U.S. Patent No. 5579517 was affirmed through reexamination on November 28, 2006. It also is well known that many companies have taken licenses under them. See TomTom Can License FAT Without Violating GPL (last visited Apr. 8, 2009).

Takeaway 4: Settlements are good for IT consumers, the people who matter most.

Litigation involving OSS is increasing, so it is good to see that suits involving OSS can be resolved in the usual way. Many tech companies, like TomTom (and Microsoft ), now pursue a “mixed source” strategy in which they distribute both open source software and proprietary software – often in the same product. Many OSS projects begin as labors of love, but most significant projects ultimately must find financial sponsors to survive and thrive. The Linux operating system, the Apache HTTP Server, the Firefox Web browser and other major OSS projects are supported by financial contributions and “volunteers” paid by major companies that produce revenue from products and services which are wholly or partially dependent upon the success of those projects. As Sun Microsystems explains in its 2007 10-K filing with the SEC, “[w]e build relationships with [the open source development community] to stimulate demand for our commercial products.”

When software companies resolve their differences by agreement, they show respect for their customers, many of whom know and care little about the geopolitics of the tech industry, and all of whom want good products at reasonable prices that they can use without concern about debates among IP lawyers. According to Microsoft, for a year before it filed suit it tried to persuade TomTom to take a license under its patents. Given how fast the suit settled and the terms of the settlement, one wonders what changed from TomTom’s perspective – except that it could no longer question whether Microsoft was serious. It seems a public skirmish could have been avoided, but the Microsoft-TomTom settlement is nonetheless another hopeful sign that the tech industry is evolving to accommodate different business models and development paradigms within the system of IP rights on which innovation for the benefit of consumers partially depends.